As soon as news broke out that the Saudis had indicated that they may raise production to a record 11 million barrels a day with effect from next month, the price of Brent Crude Oil came under immense pressure.

OPEC: The Organization of the Petroleum Exporting Countries (OPEC) is also facing political pressure from U.S President Donald Trump, allegedly accusing the organization of artificially inflating the price of Oil and hurting the global economy. In response to these allegations we saw OPEC respond by pledging the increase of Oil supply to prevent the rallying Oil prices from hurting the global economy.

In this note I will show the technicals on the charts and provide a trade opportunity with entry, stop loss and take profit levels. 

Trade war: The prevailing trade war between the U.S and China is also not helping as U.S. energy exports to China may suffer if we see China follow through with its threat to slap tariffs on U.S. oil and oil product imports.

Outlook: With U.S president Trump unleashing sanctions on Iran, the escalating Trade War and Venezuela’s Oil output sinking there are currently fears that the supply boost from the OPEC countries might not be enough to curb the Oil prices from rising.

Brent Crude Oil chart

When looking at the chart of Brent Crude we might just see the price action move even lower to the $ 70.89 level. The Price action is below the 50 day-simple moving average (SMA) which supports the move lower. If we do not see the price action move lower it might just “bounce” from current level and move higher again, so take caution.

Source: Bloomberg

Trade note on Brent

I will be looking for a short sell opportunity on Brent Crude oil from current levels as long as current market conditions prevail.

• Entry (Sell): $ 72.99
• Stop loss: $ 75.00
• Target price: $ 70.89

Source: Bloomberg

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